The Trade: Nasdaq and ASX 200 show signs of fatigue while gold and Bitcoin encounter resistance

[AI generated]

This video was created on 21 August for IG audiences by ausbiz.

IG's Tony Sycamore highlights significant trends in the NASDAQ 100, which has surpassed the 19,500 point target amid a rally driven by the avoidance of a US recession and key event risks like the Federal Open Market Committee (FOMC) minutes and Federal Reserve Chair Powell's upcoming speech.

NASDAQ surges past targets but faces potential pullback

Sycamore cautions about a potential retracement towards the 200-day moving average, reflecting current market indecision. The NASDAQ may see a pullback to around 17,500, especially with notable event risks and the challenging nature of September for equities. The market dynamics suggest cautious optimism, with a notable amount of profit-taking and indecision hinted at by recent candle patterns.

ASX 200 rally shows signs of fatigue

The ASX 200 has shown signs of tiring after a significant rally, displaying similarities to the NASDAQ’s recent trends. Despite recovering above the 8000 mark, the market rally's momentum appears to be waning. With upcoming business standard events and NVIDIA’s earnings report, the ASX 200 might face headwinds.

Historically, September has not favoured this market, hinting at potential pullbacks to the 7600 - 7500 levels, mirroring global volatility trends, particularly leading into the United States election.

Australian dollar: navigating a volatile range

The Australian dollar has fluctuated within a defined range between 68.00 cents and 63.50 cents. The currency rebounded from a low of 63.48 cents after a significant sell-off from the 67.98 cents high.

The 200-day moving average around the 66 cents area provides support level, although future movements are closely tied to the United States dollar’s performance amid the upcoming election period. The current 50-50 outlook suggests potential profit-taking in upcoming sessions.

Gold faces bearish signals despite recent highs

Gold has reached a recent high, benefiting from expectations of Federal Reserve interest rate cuts and global demand concerns. Despite trading above trend channel resistance, a bearish divergence is suggested by the Relative Strength Index (RSI) indicator failing to confirm the new highs.

This divergence hints at a deeper pullback if gold dips below the 2480 area, potentially retracting towards 2400 before attempting to reach 2600. The significant reliance on continued Federal Reserve dovishness and global economic stability remains key to gold's future trajectory.

Bitcoin struggles to break key resistance levels

Bitcoin has struggled to break past the 200-day moving average, which has become a critical resistance level. The lack of a clear catalyst for a breakout has resulted in continued fluctuation. Bitcoin remains within a range defined by the 200-day moving average near 63,000 and trend channel support around 53,000. A decisive move above 63,000 is needed to test the 70,000 level, with current trends indicating further rotation unless new market-driving factors emerge.